In 2014, as people started to receive “FATCA letters” I wrote a lengthy post describing “What to do if you receive a FATCA letter“. Information exchange under the Common Reporting Standard “CRS” has begun in 2018. As a result, I am writing this post which is to explain what the CRS is and how it relates to the FATCA letter. It is important to understand that the “CRS letter is actually a combined “CRS/FATCA” letter which is more likely to be received than the original FATCA letter. I urge that those who have received a letter of this type to read this post PRIOR to seeking professional advice!!!

You are reading this post because you have received a letter from your bank that is asking you to identify the countries where you are a “tax resident” and/or whether you are a “U.S. Person”.

The purpose of this post is to help you understand:

– why you are receiving the letter
– what the letter means
– what is the meaning of “tax resident”, “tax residence” and “tax residency” (terms which are used interchangeably)
– why “tax residency” is important to you
– the significance of being a U.S. citizen or Green Card holder
– how to identify where you may be a “tax resident”

Part A – How does FATCA differ from the “CRS”?Part B – The Combined FATCA/CRS LetterPart C – “Tax Residency 101”: It’s about where you should be paying your taxesPart D – Different definitions of “tax residence” – Not all countries define “tax residence” in the same wayPart E – Oh My God! I think I might be a “tax resident” of two countries – What is a “tax treaty tie breaker”? How does a “tax treaty” tie breaker work?Part F – A “U.S. citizen” cannot use a “tax treaty tie breaker” to break U.S. “tax residence”. How then does a “U.S. citizen” cease to be a “U.S. tax resident”?Part G – How a “permanent resident” of the U.S. – AKA “Green Card Holder” – ceases to be a U.S. tax resident Part H – Are you, or have you ever been a U.S. citizen or Green card holder? Sometimes it’s not what it seems.

Part A – How does FATCA differ from the “CRS”?

1. In 2014, we had the “U.S. person” FATCA inquisition, in 2018 we have the CRS “tax residence” search

3. Why the FATCA inquisition is different from the CRS “tax residence” search

Norman Diamond explains difference between #FATCA (asking for bank information where one DOES reside to go where he doesn't reside) and #CRS (asking about bank information where one DOES NOT reside to go where he does reside). Which makes more sense? https://t.co/F93BSAuCDcpic.twitter.com/X1hUtuKroF

This is extremely important! The FATCA IGAs provide that (in general) CERTAIN accounts worth less than $50,000 USD are not subject to FATCA reporting. The “CRS” does NOT contain a monetary threshold. As a result, more people are receiving the combined “CRS/FATCA” letter than would have received a FATCA letter. In other words, the “CRS” inquiry has served to enhance the “FATCA Inquisition”!